FAQs LINKS

QUESTIONS AND ANSWERS ABOUT COMMISSION ACTIONS AND ORDERS 

Q: What is the difference between a Commission action and an order?

Q: If the Commission issues a cease and desist order, what does that mean?

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Q: What is the difference between a Commission action and an order?

A:  An enforcement action is an umbrella term to describe the initial steps taken by the Securities Division when it believes it has evidence that a respondent (the person or company facing the allegations) has violated the state's securities laws.  The Division normally initiates an action by filing and serving a Notice of Opportunity for Hearing, which is similar to a complaint in a civil lawsuit. Respondents then have a limited time in which to request a hearing where they (or legal counsel) can present their respective cases to an Administrative Law Judge.  As part of its administrative action, the Division may also issue a Temporary Emergency Order if the alleged activity is widespread and ongoing (see explanation of term below). <Top> 

When an action is pending, the Commission's Administrative Law Judge has not yet heard any evidence about the Securities Division’s claims. If someone with whom you have invested or someone who is offering you an investment is the subject of an action, keep in mind that the Division still has to prove the allegations spelled out in the notice. Hearings on alleged violations of the Securities Act are public and you can attend,if you wish. To access the hearing calendar, visit the Commission’s web site,  www.azcc.gov or call 602-542-2237.

NOTE:  Hearings are not criminal trials.  If the Division determines that the charges against the respondent warrant criminal prosecution, the case may be referred to the Arizona Attorney General or U.S. Attorney.  Only in that arena do respondents face the possibility of prison time for their violations.

At the conclusion of the hearing, the judge will draft a proposed decision that is then considered by the Commissioners, who decide whether or not to accept the findings and sanctions.  The Commission’s decision, formalized in the form of a written order, is made during a public open meeting.  To access the open meeting schedule, visit the Commission's web site, www.azcc.gov or call 602-542-2237.  

The Commission may enter various types of orders.  These legal documents contain certain requirements that may include any or all of the following: An order to cease the illegal activity, license/registration revocation, payment of fines and restitution, and the return of sales commissions, among others. 

Here are some of the main types of orders that the Commission may issue, depending upon the stage of the proceeding:

Consent Order—Sometimes prior to the hearing or even before the Division files its charges, the Commission can enter into a settlement where the respondent agrees to comply with certain terms and conditions.  The respondent may agree to the order without admitting or denying the facts outlined in the case.

Temporary Emergency Order—The Division orders the respondent to immediately stop violating the securities laws by ceasing the activity in question.  With this type of order, the Division must eventually provide evidence to prove its allegations against the respondent at a hearing.  

Permanent Cease and Desist Order—The Commission finds that the Division has proven its case against the respondent, who must now comply with the terms of the order or be subject to additional sanctions, including contempt charges in civil court. 

Depending on the type of order and its terms, a respondent may still have the right to a full hearing before a Commission Administrative Law Judge or to appeal the decision to court.  Often in a settlement, the respondent waives any further right to appeal.  If the right to appeal is available, it must be exercised within a specific time period or the respondent may have no further recourse.  

Q: If the Commission issues a cease and desist order against an individual or company, what does that mean?

A: Each order contains specific findings of fact and conclusions of law that set out in detail the basis for the Commission’s actions. The order generally requires the respondent to “cease and desist” or “stop” from any further violations of the Securities Act.  Also, the Commission may also do any or all of the following:

            •            Revoke or suspend a financial professional’s license/registration;
               •            Require the respondent to pay restitution; 
               •            Require the respondent to pay penalties;
            •            Require the respondent return commissions earned from the illegal securities sale.

If the Commission has entered an order against an individual or company with whom you have done business, the best way for you to find out about the terms of the order is to go to the Enforcement Cases section on the left-hand menu of this web site.

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